What is an asset mix?

What is an asset mix?

An asset mix is the blend of major asset classes in a portfolio, which should be constructed based on the risk tolerance, time horizon, and goals of the investor.

A common example of an asset mix is the 70/30 stock-bond mix, where 70% of the assets are invested in stocks and 30% in bonds.

“Mix” is one way of describing the asset allocation of a portfolio, but it also describes the practice of diversifying among asset classes. The core asset classes that most people consider are stocks, bonds, cash equivalents, real estate, and commodities.

A good asset mix will keep the investor insulated to some extent from dips in any particular industry, sector, or class-type. Different asset classes will have different degrees of correlation to one another and will appreciate more in different market environments.

It should also keep the investor on track for the goals, time horizon, risk tolerance, liquidity, and income needs that he or she may have.

How Do I Determine the Right Mix of Assets?
What is the Role of Asset Allocation in My Investments?
How Do I Measure My Risk Tolerance?